By Brady Huggett
In biotechnology, coming up with compounds that affect patients is sometimes half the battle. In which case, Calyx Therapeutics Inc. should be halfway home.
The Hayward, Calif.-based oral therapeutics company raised $30 million in its fourth financing round, and said it would use the funds, in part, to further develop its small-molecule drug discovery platform based on natural plant and animal extracts with demonstrated clinical activity in humans.
The fund raising also will support clinical programs and building the company¿s ties with India, said Mark Schwartz, CEO and president of Calyx.
¿This should last us well into 2003,¿ he told BioWorld Today. ¿The platform is in place, but we want to build on it. We are at 17 people now, but we are looking at hiring a reasonable number of people, hopefully up to 25, by around the middle of next year.¿
Of those hired, Schwartz said about 60 percent would be in the research and development area and the remaining in the clinical area, with some ¿minor support staff¿ included.
With the markets in a dubious state, Calyx¿s next financing vehicle could go either way, Schwartz said ¿ perhaps a mezzanine round or, if the company¿s progression meshes with a resurgent market, becoming a public entity.
¿[Going public] is a possibility, but not something we are committed to or building all our plans around,¿ he said. ¿We want to be ready for whatever the next step might be.¿
The man with the plan for Calyx was Somesh Sharma. Sharma founded the company in March 1997 and today is its executive vice president and chief scientific officer, although he initially served as its president and CEO, as well. Somesh had ¿the idea and the vision,¿ Schwartz said, adding that in the early stages, the budding group ¿literally did some work in their own garage.¿
Calyx secured its first round of financing ¿ $1.05 million ¿ in September 1997 and has raised $44.1 million to date, including this round.
Its platform isolates the biologically active molecule from natural plant and animal extracts that have shown to have clinical activity in humans.
¿We take certain extracts that have a data trail associated with them,¿ Schwartz explained. ¿We isolate small-molecule compounds from these extracts. Once we get it, we treat it as a molecule scaffold and build on it. Our goal is to take that molecule scaffold, optimize it, develop a portfolio around it and carry that forward into the clinic. While we start with an herbal extract, we are as much a small-molecule and chemistry-driven company as we are a natural-derivative company.¿
Calyx¿s product CLX-0921 is through Phase I trials and the company anticipates filing an investigational new drug application for Phase II trials in both diabetes and rheumatoid arthritis in late spring or early summer. CLX-0921 up-regulates the expression of GLUT-4 and increases glucose uptake in adipocytes; it has also been shown to inhibit the production of TNF-alpha and the expression of COX-2.
Calyx has just finished a Phase IIa trial of CLX-0901 and expects to finish the second part in 2002¿s first quarter. CLX-0901 is a water-soluble, orally active small molecule that has been shown to lower blood glucose concentrations in several animal models of Type II diabetes.
Another product, CLX-90717, is directed against rheumatoid arthritis and inflammation, and Schwartz said he expects it to move into the clinic by the middle of 2002.
Privately held Calyx¿s business model, at least for now, is centered on taking drugs through Phase II and then partnering, but that may change.
¿At some point down the road, we would have the decision of taking compounds all the way through ourselves and commercializing them, but for now we will partner at proof of efficacy,¿ Schwartz said.
Sharma was born in India, and helped Calyx establish several collaborations through his connections. Schwartz said Calyx will build on those relationships in the future, due to the ¿significant population of highly trained, educated scientists there¿ and because conducting business there could be financially frugal. But even for Schwartz, who just took over Calyx¿s helm in May, things have just gotten better and better.
¿I think this company has tremendous potential,¿ he said. ¿I joined them because I was impressed with the progress they had made on limited resources. My enthusiasm has only increased, and I think the resources we raised speak very highly, especially in this [fund-raising] environment. I think our strategy will bear out quite well in the next year or two.¿
The Series D round was co-led by BA Venture Partners, of Foster City, Calif., and Walden International, of San Francisco. Other investors were A.M. Pappas & Associates, of Research Triangle Park, N.C.; U.S. Venture Partners, of Palo Alto, Calif.; ABS Ventures, of Baltimore; and Morgenthaler, of Palo Alto.